Couples planning to get married may consider making a prenuptial agreement. This document, which is also called a premarital agreement, outlines the property owned by each of the future spouses and the property rights available for each spouse if the marriage ends. Sometimes couples will make this type of agreement after getting married, when it is called a postnuptial agreement.
Many couples appreciate the financial clarity that this arrangement can provide, as a valid prenuptial agreement can reduce conflict when a marriage ends in divorce or death. If you choose not to make a prenuptial agreement, your property will be divided according to the laws of your state, which may not produce an outcome that satisfies you. Making a decision about what to do with your property beforehand allows you to avoid uncertainty and the possibility of disappointment.
Think twice before agreeing to a pre-marital or post-marital agreement on your own. Such an agreement might not hold up in court if each spouse was not represented by a separate attorney.
As a preliminary matter, it is often good to talk with your spouse and write down some of your thoughts about certain assets you own and what you would want to happen to them should your relationship dissolve. In some cases, you and your spouse may be able to write the first draft of a prenuptial agreement before consulting a lawyer. Once you have settled on an arrangement with your spouse and drafted an agreement, you should still consult with a lawyer to check that it is valid and give you any relevant advice. When deciding to prepare a prenuptial agreement, many couples may decide to retain individual counsel to ensure they fully understand what rights they may be surrendering. While hiring two sets of lawyers will increase legal fees, having your own lawyer ensures that your interests are fully protected and not compromised by any potential conflicts of interest.
Before a court will enforce a prenuptial agreement, it will seek to determine whether the agreement is written, clear and fair. The court will consider many factors, including whether the parties adequately disclosed their finances, were each represented by legal counsel, and voluntarily entered into the agreement free of coercion. The court will also look at the terms of the agreement to see whether the agreement is fair, and not one-sided or unconscionable.
What a Prenuptial Agreement Can Include
There are several reasons to make a prenuptial agreement. People often think of them as tools for very rich people to keep control over their wealth, but this is far from the only situation when they are useful. Prenuptial agreements can cover not just property that each spouse owns but debts that each spouse owes. This means that they can shield each spouse from liability for the other spouse’s debts. Couples with children from earlier marriages may use a prenuptial agreement to ensure that they can leave their separate property to those children when they pass away. Of course, you will need to create estate planning documents such as a will or trust to fully protect those wishes.
A prenuptial agreement also allows you to keep certain items of significance in the family. Sometimes a precious family heirloom will have been passed down through generations, acquiring a personal significance far beyond its market value. This arrangement can make sure that you have the chance to continue the family tradition of passing it to your descendants.
Pre-marital and post-marital agreements are just one way to protect your assets. Justia’s Estate Planning center offers more information.
Moreover, a prenuptial agreement allows couples to keep their finances separate if they prefer. This can be especially useful if a marriage ends in divorce, when a court otherwise would decide which property goes to each spouse. Few people enter a marriage expecting that it will end in divorce, but the reality is that many American marriages do dissolve before the death of either spouse. Taking the time to draft a clear arrangement in advance can reduce potential conflict in the future.
There are many other issues that you can cover with a prenuptial agreement. You can use it to decide how to manage a joint bank account with your future spouse, how to handle tax returns and household bills, how to make credit card payments, or how much money you will set aside for savings. Some couples who have not finished their education might include an arrangement on how they will handle college expenses. It also can address how you will settle any disputes that might arise between you, such as by using a neutral mediator.
What a Prenuptial Agreement Cannot Include
It is important to know the limits of a prenuptial agreement because a section that crosses those limits may invalidate the entire agreement. First, you should remember that a prenuptial agreement is essentially a financial arrangement. It shouldn’t extend to your relations with other family members, your decisions about whether and when to have children, or who is expected to do certain errands.
Also, no prenuptial agreement can give either member of the couple an incentive for divorce. This means that you should think twice before making a specific arrangement on how to divide property after divorce that appears to clearly favor one spouse over the other. Prenuptial agreements cannot place restrictions on child support, child custody, or any other rights regarding children of a marriage that ends in divorce. Some states go further and prevent these arrangements from including waivers of alimony, or spousal support. Not every state has this rule, so you should consult with an experienced family law attorney in your state if you are considering this option.
Prenuptial agreements are not exciting, romantic, or anything else that you expect from a marriage. Still, trading some dull discussions now for certainty many years ahead may be an exchange that you want to make, no matter your financial position.
Cohabitation agreements are similar to pre-marital or post-marital agreements, but are made by unmarried couples who cannot legally marry or do not wish to legally marry.